Global Economy at “Definitive Turning Point,” Ned Davis Research Says

By Ben Levisohn

Has the global economy turned the corner?

Sam Panthaky/Agence France-Presse/Getty Images

Ned Davis Research says it has. They point to yesterday’s release of the OECD Composite Leading Indicator–which combines the leading indicators of all OECD countries plus six nonmembers–which rose 0.1 point in November.

That puts it “almost inline with its long term average…,” Ned Davis Research noted today. And for those worried that the global economy will nosedive at any moment, take heart–after three such gains, it “suggests a definitive positive turning point in the global economy.”

In fact, when the leading indicators start heading higher–and economies start growing–the expansion usually lasts for a median 12 month. That means this rally, could just be getting started, Ned Davis Research said.

Of course, there are exceptions. There was one just about two years ago, when the leading indicators rose for four straight months before the debt-ceiling debacle in the U.S., fears of a hard landing in China, and the euro-zone meltdown conspired to bring the growth to a quick end.

This time, however, only a repeat of the debt-ceiling debacle looms, while Europe and China appear far less likely to provoke a rush to the exits. That means the current expansion could be more in line with the historical data.

And provide more fuel for the current equity rally.

The economic prospects for China and India were “particularly bullish,” Ned Davis Research noted, while Brazil is characterized as “stabilizing.”

Is it too late to buy more of the iShares MSCI Emerging Markets Index (EEM) exchange-traded fund?

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. Barrons.com’s Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools. She studies multiple languages and photography.